Is Hatch Invest the best broker for US markets in NZ?

Hatch is an online digital broker providing access to the US investment markets.
With no minimum required investment, you can buy US shares, ADRs or ETFs, including fractional shares.
Automatically takes care of any US tax liabilities.

Hatch is a digital investment platform designed for Kiwi investors who want affordable access to real time trading in the US share markets. Hatch has helped over 120,000 invest over $1 billion in the US.

It is ideal for investors who want the higher growth and greater liquidity of US investments, but how does it compare against other trading platforms?

Who owns them and are they safe?

Hatch is a digital investment platform and the retail arm of FNZ, another Wellington success story. FNZ is a leading global wealth management business and provides backend technology that powers wealth-building platforms like Hatch. The aim of Hatch is to give Kiwis straightforward and affordable access to the US share markets.

When you use Hatch, you get your own US brokerage account through their partner DriveWealth. DriveWealth has protections in place in the US through Securities Investor Protection Corporation (SIPC), which insures your account for up to $500,000 in the event DriveWealth falls into financial difficulty.

In terms of cyber and data security, Hatch undertakes ongoing security audits. All the information on Hatch is encrypted and they adhere to the latest security practices.

How Hatch works

When you sign up for an account, you can choose what you’d like to invest in with no minimum investment requirement. It takes about 30 seconds to join and once your account is set up, you can deposit money and start investing.

If you are not yet ready to invest, you have the option of setting up a watchlist so you can keep track of companies. Hatch also has a live chat so you can get help if you need it.

Hatch also has digital educational guides to help you to understand more about investing. You can learn about investing and monitor shares for as long as you like without paying for that service.

Once you are invested, your online account will show you how well your investments are performing.

What can you trade with Hatch?

Hatch provides access to the US share markets and the ability to buy and sell shares in over 2,900 companies and over 900 exchange traded funds, also known as ETFs, from well-known fund managers like Vanguard. You can also become a shareholder in over 250 ADRs. An ADR is an American depositary receipt that allows you to invest in foreign companies, so you can invest in businesses in China and India, for example. Alibaba is also listed as a company you can invest in if you have a Hatch account.

Kids accounts

Anyone under 18 can have a kids account. To set up a kids account, you must be their parent or legal guardian and you will need to provide evidence of this. You also need to have your own Hatch account before signing up for a kids account.

Once you have applied and provided ID details of the child, then the approval process is usually completed within a day. You can then view your account and the child’s account information once you log into your main adult account.

How are dividends handled?

All of the dividends that you receive through Hatch are paid out in USD straight into your Hatch account. You can choose to reinvest them by buying more shares, or to withdraw them whenever you like.

Fees

It is free to sign up and there are no ongoing subscription costs. There are some costs involved though which we have noted below.

Exchange fees

This exchange fee is 0.5%. When you deposit or withdraw money, Hatch automatically exchanges it from NZD to USD. This 0.5% fee is included in the exchange rate you see in Hatch. Hatch advises that if you deposit over $100k then they will provide special (cheaper) exchange rates.

Brokerage fees

This fee is a minimum of $3 USD to buy and sell shares. You’ll pay a flat fee of $3 USD for every order of up to 300 shares. However, if you buy more than 300 shares in one order, you'll only have to pay $0.01 a share.

US tax

A one-off $1.50 USD fee is deducted from your first deposit to cover the set-up, and after that, a $0.50 fee is deducted from your account each year to sort your US taxes for you. Hatch also aims to simplify this by providing a guide so as to make the tax admin easy for you.

Kids account fee

With a kids account it’s $0.50 to buy or sell up to 50 shares, this is cheaper than an adult account.

Pros and cons

Pros

Buy and sell US shares, ETFs and ADRs, including fractional shares.
No subscription fees means you can keep more of your gains.
Access to educational content and an exclusive investor community.
Automatically pays US tax on your behalf so you don't have to bother with paperwork.
Auto investing means you can build your position over time with ease and take advantage of dollar-cost averaging.

Cons

Withdrawing funds can take up to to 4 days due to currency exchange requirements.
Mandatory 0.5% currency exchange fee when depositing or withdrawing funds.
Can only invest in US securities.

Alternatives

There are alternatives to Hatch, with Stake being the most similar in that it is also focused solely on the US share market. Options like Simplicity and InvestNow are targeted to novice investors. With Hatch you can set up a child’s account, you have to be the legal parent or guardian, whereas with other alternatives, such as Sharesies, do not require the legal parent or guardian to set up the kids account.

Comparisons

Hatch Invest versus other brokerage services in New Zealand.

FAQs

Can I transfer shares to Hatch from another broker?

If Hatch offers the shares, then you can move them over. Hatch specifies that ‘there’s no need to exchange money, or sell shares, and there are no tax implications. We'll even help out with the fees your existing broker charges for the move’.

You will have to be over 18 to open your own Hatch account however anyone under 18 years old can also have an account providing that it’s a Hatch kids account.

How do I deposit funds into my account?

Once your account has been set up and approved, you can use online banking to deposit money. Hatch will provide you with a unique code that you’ll add into the reference field when you make the payment, then the money will go into your Hatch account. If you deposit before 2.30pm on any business day, then this money should reach your Hatch account early the following morning, when the US markets open. Hatch also allows you to deposit in USD.

Hatch requires a small deposit from your personal NZD bank account to Hatch as a security measure. Your USD deposit must be from an account in your name. You can use your USD bank account or preferred foreign currency platform such as TransferWise for example. You just need to ensure that the name on that account exactly matches the name on your Hatch account.

What is the minimum deposit required?

There’s no minimum when you invest with Hatch although Hatch recommends starting with $100.

How long does it take to withdraw funds?

You can request a withdrawal at any time through your Hatch account online. Once this request has been processed, Hatch exchanges the USD to NZD and deposits the money into your nominated New Zealand bank account within 4 days.

How does Hatch make money?

Hatch is paid a brokerage fee on your orders. They also take a currency exchange fee when they convert your NZ dollars to US dollars or vice versa.

Verdict

Hatch is one of the best platforms for Kiwis to gain access to the US markets. With no minimum account balance, low fees, and fractional share investing, even new investors with little to invest can get started. Hatch only provides access to US shares, ETFs and ADRs, so if you are looking for exposure to a diversified portfolio of NZ assets, you may need to open an account elsewhere. However, if you are ready to invest in one of the deepest and most liquid markets globally, the Hatch platform is a good option.